Intraday Market Thoughts Archives

EURCAD RECOVERY risks extending above 1.3945 (previous support), coinciding with the 55-week MA seen in the Nov 8 HotChart http://bit.ly/cEZhqv Looking at the weekly slow stochastics, the downtrend remains intact (as seen in the HotChart). Failure to close Friday above 1.3940s spells further losses ahead otherwise, euro bulls will aim at regaining the 1.4070. Fundamentally, euro may be propped by anticipation of an inevitable IMF/EU loan to Ireland whose objective is to alleviate bond yields. The discussions could carry on into next week, which is likely to keep EURUSD confined between $1.3550 and $1.37. Note the main reason to euros Thursday drop was robust US data (Philly Fed & jobless claims). CHF WEAKNESS competed with YEN WEAKNESS as EURCHF and USDCHF were among the sharpest gainers. The EURCHF right shoulder in 1.3490 was broken swiftly, invalidating the H&S called yesterday. USDCHF will likely consolidate around 0.9870-0.9980, but weekly chart continues to suggest parity break-out towards 1.0150 and 1.0220.

I will be in Paris Friday and Saturday speaking at the SALON ACTIONARIA with CMC Markets-France. http://bit.ly/cfw8ft

ASHRAF SPEAKING IN PARIS -- SALON ACTIONARIA Friday & Saturday

http://bit.ly/cfw8ft

PALAIS DES CONGRES - PARIS

Guerre des devises : quelles stratgies appliquer ?

Ashraf LAIDI, Responsable de la Stratgie March - CMC MARKETS

FX MARKETS may temporarily revert to the textbook relationship, whereby decent US data is a positive for the US currency, based on yield differentials and revised expectations on the completion of the $600 bln QE2. THIS WEEK's REMARKS FROM St Louis Feds Bullard raising the possibility that the Fed may not purchase the full $600 bln announced under QE2 could mark a new rhetorical method for the hawks at the FOMC. This means that markets will now be faced with a binary assessment to the Fed i.e QE2 will either be fully implemented or not. Creating a binary or 2-pronged option choice regarding Fed expectations is likely to intensify the momentum of market moves in bonds, FX and even equity indices. Accordingly, positive US data starting to favour the USD, especially as the risks of Irish debt. STRONG PHILLY FED SURVEY and the lowest 4-week MA of US jobless clains since Sepp 2008 has boosted USD against JPY and CHF while dragging EUR by nearly 100 pts from 13660s.

USD WEAKNESS re-emerges on a combination of rebounding Asian equities and easing off in the USD rally. Euro rebounds off its lows as IMF/EU officials start LOAN DISCUSSIONS in Ireland. Amounts circulated range in EUR 10-15 bln. Irish Fin Min Lenihan insists the talks are not about a bailout but a loan. The importance of $1.35 in EURUSD (55-week MA) was highlighted by its ability to hold up the pair just as GOLD HELD UP well above the $1320 resistance. Must watch whether GOLD IS DEVELOPING A HEAD & SHOULDER formation, with the right shoulder at 1382-3. The EURCHF Head & Shoulder remains valid as long as NO CLOSE ABOVE 1.3495 occurs (Oct 8 high).

THERE ARE 3 POTENTIALLY destabilizing forces for risk appetite and the euro STANDING OUT from the Greece debt crisis of Jan-June; i) Greater dissent in the Irish Parliament against austere budgetary decisions than in the case of Greek parliament earlier this summer; ii) More support for irish debt restructuring by France and Germany; iii) expectations of further Chinese rate hikes; which have more market impact than raising reserve requirements. THESE ARE THE MAINF ACTORS that could make a difference in extending euro's losses, particularly against the USD. I do NOT see a close above $1.3578 today (55-day MA) which should maintain downside pressure, but no close below $1.35 (55-week MA) is seen for today.

EURUSD WAS ABLE TO close above its 55-week MA of $1.3502 in Tuesdays NY session after an intraday low of $1.3446. Just like we paid attention to whether a close of $1.37 would occur, keep an eye on $1.35, a close below which would extend losses towards $1.3320. EURCHF attempting to regain $1.3470, which requires watching whether it would become a right shoulder of the H&S formation starting from the Sep low. Repetitive failure to break 1.34 would likely retest 1.3320, followed by 1.3250. UK Oct Unemployment fell 3.7K--the first 1decline since July. dragging down EURGBP below 0.8490, with 08420 remaining temporary support. GBPUSD eyes key support at $1.5830.

Eid Mubarak, Kul Sana Wentoum Tayeboun. Wishing you all the Blessings for Peace & Joy http://twitpic.com/37fbr1

Ashraf Video Presentation for Reuters Thomson on the DOUBLE TOP GALORE in S&P500, Brazil's Bovespa & Shanghai Composite Index http://bit.ly/9TtJJW

BROAD USD RALLY partly boosted by as Atlanta Fed's BULLARD saying there is a "POSSIBILITY" the Fed may NOT buy all $600 bln under QE2 which has been successful already. Meanwhile, USDCAD & USDCHF targets from today's IMT & last week's calls are all being hit.

CAD PRESSURED across the board after disappointing factory orders and manufacturing sales, pushing USDCAD, EURCAD and most CAD pairs against the loonie. In line with my earlier tweet of long USDCAD at 1.0145, Im looking for a prelim target of 1.0195 before 1.0230 extends with the help of further pullback in equities. Remaining bearish on EURCAD, eyeing 1.3660. ONLY A CLOSE above 1.39 in EURCAD would merit reconsideration of the current downleg. DO NOT FORGET that it was the WEEKLY chart in EURCAD that triggered my bearish call. This is similar to my long parity outlook for USDCHF of 2 weeks ago when it stood at 0.9600, had a temporary decline to 0.9550 before hitting 0.9870, maintaining my focus on 0.9950 and 1.0130. US Oct indus production disappointed by coming unchanged vs expectations of +0.3% following a 0.2% decline. And finally gold adds to losses, falling below $1355, nearing my $1320 target from the latest article--same article which remains bearish EURGBP as long as no break of 0.86.

UK OCT CPI RISES to 3.2% from 3.1%, which should further weigh on EURGBP and add gains to GBPAUD. GBPUSD gains by more than half a cent to $1.6080. The data help to delay any expectations of QE2 from the BoE, but more importantly, bolster GBPs existing robustness against EUR, AUD and CHF. My bearish stance EURGBP eyes medium term declines towards 0.8280, followed by 0.81. Only a close above 0.8870 merits re-consideration of this important downcycle. 1,64 in GBPAUD is a consideration as the Aussie is pressured on a combination of global risk aversion and dovish RBA minutes. The central bank said the move was pre-emptive and prudent, rather than aiming at rising inflation, which led to interpretation that the rates may have peaked out for at least the next 2 months. EURUSD TRADERS TO WATCH Nov ZEW survey (due at 10 GMT); Sentiment index expected at -7.7 from -7.2; Current Conditions seen at 75 from 72.6. Any softening in this report should further punish EURGBP and EURCAD.(1.36)

MANY OF YOU HAVE RAISED questions about my short SHORT-TERM BEARISH CALL in gold put forth in my latest article. Most of the objections you have raised have already been tackled in the 4th paragraph from the bottom in the article (click here: http://bit.ly/bg1Cvj ) My $1320 target is for this year. Only a daily close above $1377 would re-awaken the short-term bull and likely trigger a fresh attempt above $1405. Im well aware that QE2 in the US is a generally positive dynamic for gold...and so are the troubles in Ireland. But the intermarket forces are pointing to the other direction into the SHORT TERM. Again.. if you havenot read the article, then please do so because most of the questions Id been getting are tackled in it.

US Oct retail sales may have soared past expectations, rising 1.2%--the highest increase in 7 months, but the unexpected slide in the New York Feds Nov manufacturing index to -11.1 from +15.7 (vs expectations of a 13.10 reading) and the disappointingly low +0.2% in sales excluding autos/gasoline/building materials from +0.4% served to scale down gains in stocks, bond yields and the US dollar. Recent USD gains have partly resulted from Irelands sovereign woes, but mainly due to rising US yields following the unexpectedly strong October jobs report. $1.37 EURUSD retains the level to watch as far as daily closing values before considering the $1.35 figure55-week MA. Yen weakness broadening across FX as global yields extend recovery on robust US data and Chinese inflation. Fears of further Chinese tightening are hampering the risk trade, along side commodities. As US 10-year yields hit a 3-month high of 2.9%, breaking above their 55 and 100-day MAs, the next level in focus becomes 3.2%--the 200-week MA. Such outlook would have positive implications for USDJPY reaching a preliminary target of 86.